State Department to Allow Canadian Pipeline

Washington - The Obama administration gave a crucial green light on Friday to a proposed 1,711-mile pipeline that would carry heavy oil from Canada across the Great Plains to terminals in Oklahoma and the Gulf Coast, saying the project would provide a secure source of energy without significant damage to the environment.

In reaching its conclusion that the Keystone XL pipeline from the oil sands deposits in Alberta would have minimal environmental impact, the administration dismissed criticism from environmental advocates, who said that extracting the oil would have a devastating impact on the climate and that a leak or rupture in the 36-inch-diameter pipeline could wreak ecological disaster. Opponents also said the project would prolong the nation’s dependence on fossil fuels, threaten sensitive lands and wildlife and further delay development of clean energy sources.

The State Department said in an environmental impact statement that the pipeline’s owner, TransCanada, had reduced the risks of an accident to an acceptable level and that the benefits of importing oil from a friendly neighbor outweighed the potential costs.

Final approval of the $7 billion project will not come before the end of the year, after public hearings and consultation with other federal agencies. But the State Department report Friday gave every indication that the administration was prepared to see Keystone proceed. The pipeline is expected to open in 2013 unless delayed by lawsuits or other challenges.

For many in the environmental movement, the administration’s apparent acceptance of the pipeline was yet another disappointment, after recent decisions to tentatively approve drilling in the Arctic Ocean, to open 20 million more acres of the Gulf of Mexico for oil leasing and to delay several major air quality regulations. The movement is still smarting from the administration’s failure to push climate change legislation through Congress.

Analysts and environmental advocates said these decisions had opened a wide and perhaps unbridgeable breach between the Democratic president and environmentally minded voters.

Michael Brune, president of the Sierra Club, urged President Obama to veto the project, despite the State Department’s willingness to see it proceed.

“The decision-making authority is solely the president’s,” he said. “Keystone XL is a huge issue for our young leaders at the Sierra Club, but they’re also watching the president’s actions on other critically important environmental and public health protections. It will be increasingly difficult to mobilize the environmental base and to mobilize in particular young people to volunteer, to knock on thousands of doors, to put in 16-hour days, to donate money if they don’t think the president is showing the courage to stand up to big polluters.”

The proposed Keystone XL pipeline extension would connect Canada’s oil sands to several vital refineries around Houston and the Gulf Coast that are designed to refine heavy crude oils. Keystone XL would also connect the synthetic fuel to a vast pipeline network that snakes out from the Gulf of Mexico to several large metropolitan areas around the Eastern Seaboard.

Kerri-Ann Jones, assistant secretary of state for oceans and international environmental, said in a telephone news briefing that the environmental impact statement released Friday was not the last word on the project. The president must make a final determination that the project is in the nation’s economic, political, energy security and environmental interest, she noted.

But the report does conclude, she said, that “there would be no significant impacts to most resources along the pipeline’s corridor” if the project’s operator follows all relevant laws, although she said that some American Indian cultural resources and the habitat for some plants and wildlife could be adversely affected.

TransCanada has insisted that its pipeline will be as safe as any in North America. It has refused to change its application in the face of critics who say the half-inch thick pipe wall in the pipeline is insufficiently sturdy for maximum flow pressures, a claim the company denies.

TransCanada agreed to 57 conditions set by the Department of Transportation last spring, including burying the pipeline four feet below the surface, committing to frequent aerial and ground monitoring and setting the maximum distance between shut-off valves at 20 miles.

“We believe we are building the safest pipeline in North America,” said Terry Cunha, a TransCanada spokesman.

The Canadian government has lobbied hard for the pipeline extension, joining forces with oil companies like Royal Dutch Shell and Exxon Mobil that have large investments in Canadian oil sands production. The future expansion of oil sands production is largely at stake since planned production growth could overwhelm current pipeline capacity in less than five years.

Gary Doer, the Canadian ambassador to the United States, said building the pipeline would produce 20,000 construction jobs and 100,000 additional indirect jobs in services and supplies. “It’s good for the US economy, US jobs and US energy security,” he said. “If you ask Americans, would you choose Canada over the Middle East, they’d say yes.”

Mr. Doer said the carbon emissions from oil sands production and refining have declined by roughly 40 percent per barrel since1990, and further improvements were being developed. “We have to continue working on the sustainability of development,” he said. “We believe in clean water and air too.”

Canada, already the United States’ No. 1 source of imported oil, produced 1.5 million barrels a day of synthetic crude from oil sands in 2010 and hopes to expand that total to 2.2 million barrels in 2015 and then to 3.7 million barrels a day by 2025. That level of expansion will require not only the Keystone project, but also pipelines to the west coast of Canada, where the crude could be exported to China and the rest of Asia.

The Keystone expansion would increase Canada’s pipeline capacity by 700,000 barrels a day, roughly equivalent to the amount of oil Malaysia produces. Proponents say that would give a big lift to Canada’s economy, and increase trade between the two countries.

If Keystone is not ultimately approved, Canada could proceed with plans to build pipelines to its west coast to increase exports, but that would mean regulatory delays spurred by opposition from Native Canadian groups that have a large say in territories they occupy.

The Canadian Energy Research Institute, a research group with ties to the oil industry, estimates that the Keystone extension would mean more than $600 billion in additional investments and revenue from operations in existing and future oil sands projects through 2035.

Over the last several years, oil companies working in Canada have acknowledged that they need to reduce the environmental impact of extracting oil from oil sands, which in many cases mines deep pits in a process that levels large areas of the boreal forest, which is the nesting ground of many bird species and naturally sequesters carbon that otherwise would enter the atmosphere as greenhouse gases.

The industry says it wants to reduce damage to the forests by using less invasive techniques, such as by injecting hot steam into seams of bitumen, the tarry raw ingredient of the crude, to remove it through pipes in the ground. It is also trying to reduce the heavy carbon emissions that come from refining oil sands by improving efficiencies to burn less natural gas in the processing.

According to IHS-Cera, a consultancy, carbon dioxide emissions from the oil sands, including the full cycle from production through combustion and exhaust from an automobile tailpipe, is greater than many Saudi, Mexican and Venezuela crudes but is comparable or even lower than heavy crudes produced in California, Nigeria and the Middle East and pumped in American gas stations.

Clifford Krauss has been a correspondent for The New York Times since 1990. He currently is a national business correspondent based in Houston. He covered the State Department, Congress and the New York City police department before serving as Buenos Aires bureau chief and Toronto bureau chief. Before working at The Times, he worked as a foreign correspondent for The Wall Street Journal and was the Edward R. Murrow fellow at the Council on Foreign Relations. He is author of "Inside Central America: Its People, Politics and History," (1991). He has published articles in Foreign Affairs, GQ and Wilson Quarterly, along with other publications.

State Department to Allow Canadian Pipeline

Washington - The Obama administration gave a crucial green light on Friday to a proposed 1,711-mile pipeline that would carry heavy oil from Canada across the Great Plains to terminals in Oklahoma and the Gulf Coast, saying the project would provide a secure source of energy without significant damage to the environment.

In reaching its conclusion that the Keystone XL pipeline from the oil sands deposits in Alberta would have minimal environmental impact, the administration dismissed criticism from environmental advocates, who said that extracting the oil would have a devastating impact on the climate and that a leak or rupture in the 36-inch-diameter pipeline could wreak ecological disaster. Opponents also said the project would prolong the nation’s dependence on fossil fuels, threaten sensitive lands and wildlife and further delay development of clean energy sources.

The State Department said in an environmental impact statement that the pipeline’s owner, TransCanada, had reduced the risks of an accident to an acceptable level and that the benefits of importing oil from a friendly neighbor outweighed the potential costs.

Final approval of the $7 billion project will not come before the end of the year, after public hearings and consultation with other federal agencies. But the State Department report Friday gave every indication that the administration was prepared to see Keystone proceed. The pipeline is expected to open in 2013 unless delayed by lawsuits or other challenges.

For many in the environmental movement, the administration’s apparent acceptance of the pipeline was yet another disappointment, after recent decisions to tentatively approve drilling in the Arctic Ocean, to open 20 million more acres of the Gulf of Mexico for oil leasing and to delay several major air quality regulations. The movement is still smarting from the administration’s failure to push climate change legislation through Congress.

Analysts and environmental advocates said these decisions had opened a wide and perhaps unbridgeable breach between the Democratic president and environmentally minded voters.

Michael Brune, president of the Sierra Club, urged President Obama to veto the project, despite the State Department’s willingness to see it proceed.

“The decision-making authority is solely the president’s,” he said. “Keystone XL is a huge issue for our young leaders at the Sierra Club, but they’re also watching the president’s actions on other critically important environmental and public health protections. It will be increasingly difficult to mobilize the environmental base and to mobilize in particular young people to volunteer, to knock on thousands of doors, to put in 16-hour days, to donate money if they don’t think the president is showing the courage to stand up to big polluters.”

The proposed Keystone XL pipeline extension would connect Canada’s oil sands to several vital refineries around Houston and the Gulf Coast that are designed to refine heavy crude oils. Keystone XL would also connect the synthetic fuel to a vast pipeline network that snakes out from the Gulf of Mexico to several large metropolitan areas around the Eastern Seaboard.

Kerri-Ann Jones, assistant secretary of state for oceans and international environmental, said in a telephone news briefing that the environmental impact statement released Friday was not the last word on the project. The president must make a final determination that the project is in the nation’s economic, political, energy security and environmental interest, she noted.

But the report does conclude, she said, that “there would be no significant impacts to most resources along the pipeline’s corridor” if the project’s operator follows all relevant laws, although she said that some American Indian cultural resources and the habitat for some plants and wildlife could be adversely affected.

TransCanada has insisted that its pipeline will be as safe as any in North America. It has refused to change its application in the face of critics who say the half-inch thick pipe wall in the pipeline is insufficiently sturdy for maximum flow pressures, a claim the company denies.

TransCanada agreed to 57 conditions set by the Department of Transportation last spring, including burying the pipeline four feet below the surface, committing to frequent aerial and ground monitoring and setting the maximum distance between shut-off valves at 20 miles.

“We believe we are building the safest pipeline in North America,” said Terry Cunha, a TransCanada spokesman.

The Canadian government has lobbied hard for the pipeline extension, joining forces with oil companies like Royal Dutch Shell and Exxon Mobil that have large investments in Canadian oil sands production. The future expansion of oil sands production is largely at stake since planned production growth could overwhelm current pipeline capacity in less than five years.

Gary Doer, the Canadian ambassador to the United States, said building the pipeline would produce 20,000 construction jobs and 100,000 additional indirect jobs in services and supplies. “It’s good for the US economy, US jobs and US energy security,” he said. “If you ask Americans, would you choose Canada over the Middle East, they’d say yes.”

Mr. Doer said the carbon emissions from oil sands production and refining have declined by roughly 40 percent per barrel since1990, and further improvements were being developed. “We have to continue working on the sustainability of development,” he said. “We believe in clean water and air too.”

Canada, already the United States’ No. 1 source of imported oil, produced 1.5 million barrels a day of synthetic crude from oil sands in 2010 and hopes to expand that total to 2.2 million barrels in 2015 and then to 3.7 million barrels a day by 2025. That level of expansion will require not only the Keystone project, but also pipelines to the west coast of Canada, where the crude could be exported to China and the rest of Asia.

The Keystone expansion would increase Canada’s pipeline capacity by 700,000 barrels a day, roughly equivalent to the amount of oil Malaysia produces. Proponents say that would give a big lift to Canada’s economy, and increase trade between the two countries.

If Keystone is not ultimately approved, Canada could proceed with plans to build pipelines to its west coast to increase exports, but that would mean regulatory delays spurred by opposition from Native Canadian groups that have a large say in territories they occupy.

The Canadian Energy Research Institute, a research group with ties to the oil industry, estimates that the Keystone extension would mean more than $600 billion in additional investments and revenue from operations in existing and future oil sands projects through 2035.

Over the last several years, oil companies working in Canada have acknowledged that they need to reduce the environmental impact of extracting oil from oil sands, which in many cases mines deep pits in a process that levels large areas of the boreal forest, which is the nesting ground of many bird species and naturally sequesters carbon that otherwise would enter the atmosphere as greenhouse gases.

The industry says it wants to reduce damage to the forests by using less invasive techniques, such as by injecting hot steam into seams of bitumen, the tarry raw ingredient of the crude, to remove it through pipes in the ground. It is also trying to reduce the heavy carbon emissions that come from refining oil sands by improving efficiencies to burn less natural gas in the processing.

According to IHS-Cera, a consultancy, carbon dioxide emissions from the oil sands, including the full cycle from production through combustion and exhaust from an automobile tailpipe, is greater than many Saudi, Mexican and Venezuela crudes but is comparable or even lower than heavy crudes produced in California, Nigeria and the Middle East and pumped in American gas stations.

Clifford Krauss has been a correspondent for The New York Times since 1990. He currently is a national business correspondent based in Houston. He covered the State Department, Congress and the New York City police department before serving as Buenos Aires bureau chief and Toronto bureau chief. Before working at The Times, he worked as a foreign correspondent for The Wall Street Journal and was the Edward R. Murrow fellow at the Council on Foreign Relations. He is author of "Inside Central America: Its People, Politics and History," (1991). He has published articles in Foreign Affairs, GQ and Wilson Quarterly, along with other publications.